Monthly Archives: May 2012

Freedom to Choose, Monthly Newsletter as always an interesting read

FROM THE CHAIRMAN
In just over a months time we are due to ‘celebrate’ 5 years of the smoking ban.
We can also celebrate: 8,000 or 14% of our pubs closing 25% of bingo halls and Working Men’s Clubs Upwards of 150,000 full and part time jobs lost social isolation, especially of the elderly characterless pubs and a nanny state smelling blood.
And now alcohol, obesity: every fake charity wants to get its nose in the trough to tell us how to live our lives. We read that David Cameron wants to introduce ‘parenting classes.’ The nanny state in literal and metaphorical terms.
While we may be on the back foot for now, Cameron and the other political parties will no doubt feel the backlash of an electorate tired and disillusioned by governments of all persuasions who have nothing better to do than to interfere with our informed choices.
Dave Atherton
NEWS STORIES
John Lydon, aka Johnny Rotten of the Punk Rock band ‘The Sex Pistols’ fame, despises the smoking ban. In an article for NME he expresses strong views on the subject and tells it exactly how it is. He urges David Cameron to overturn the Health Act 2006 which introduced the smoking ban.


Denial of NHS treatment to smokers and the obese: a survey showing 54% of doctors answering a poll believed treatment should be restricted or refused led to controversy and questioning of the results by other doctors and the general public.


However, this was swiftly followed by letters from other doctors saying that the survey was very limited and that denying treatment goes against medical ethics:


ASH Wales has been given a £850,000 Big Lottery funding to help young people quit. The grant is over 3 years and will give them an increase of over 74% on their previous annual income of (£381,000 end March 2011).


The blogger Dick Puddlecote has commented on the story on his own blog: It might interest you to know that one of the Big Lottery Fund’s board members is a lady named Maureen McGinn. There is also a Maureen McGinn who is chair of the board of ASH Scotland, and the pictures provided on both sites strongly suggest that they are one and the same person.
Board member being from ASH and the biggest award going to its sister organisation in Wales? Isn’t that an amazing coincidence, eh?


Britons want to live near a pub, research finds, even if they seldom visit. Three in ten people find pubs more pleasant since the smoking ban. In other words, 70% do not find pubs more pleasant since the smoking ban.
A dozen pubs are still closing every week, says CAMRA. Mind you, they do not mention the elephant in the room.


A sexy photo of Madonna posing naked on a bed smoking a cigarette has sold for £15,000. The Daily Mail says the picture is absolutely stunning. And, er, here is the link to the news story. With the picture. So you can judge for yourselves.

F2C FRONT PAGE ARTICLE ROUNDUP
F2C was accused in a report by ASH of being a stooge for Big Tobacco. Here, Dave Atherton confesses that we are in fact mouth-foaming stooges for Big Pharma.


The Dutch anti-smoking industry had their case to extend the smoking ban to smaller bars thrown out. We were pleased.


Lung cancer is caused by naturally-occurring radon gas, of which there is are high levels in parts of the UK. This is a recent report from radon tests in Scotland.

THE BLOGS
Lots of good articles on the blogs, as usual, but there is not enough space to list them all.
So here is a short selection with apologies to all superb bloggers not included here:
Frank Dais is looking for volunteers to do a survey:
Survey one Survey Two


Chris Snowdon has produced an authoritative critique of ‘sin Taxes’ for the Adam Smith Institute. Very much worth reading the full PDF document: The true cost of taxing Alcohol, tobacco and other vices. Why a fat tax would be bad idea. The full PDF can be found here:


Junican at the Bolton Smokers Club has written brief, (its still 60 pages) summary of the McTear vs ITL court case and the Doll and Hill Hospital Study (1950): Bolton Smokers Club Summary. (see also side Bar)

THE LAST WORD
Finally, an insight into the tobacco control industry from Simon Clark: In the course of the debate Chris and I discovered that anti-smoking activists like Gabriel Scally find it really, really irritating to be labelled the “tobacco control industry”. I’ll remember that in future

Freedom2choose: c/o John H Baker 22 Glastonbury House, Priestfields, Middlesbrough, Cleveland TS3 0LF Tel/Fax 0845 643 9469

Freedom2choose (Scotland): c/o Michael Davidson, 15, Linksview House, Leith, EH6 6DP Tel 0845 643 9552

Thinking of a Micro Pub from the pen of Robert Sayles

 

Thinking micro

‘It appears to have everything prospective publicans crave; low start up costs, choice of location, competitive rent and FOT on a fantastic range of cask ales. It’s the way to go for many of those thinking about entering the trade, isn’t it?’

Are you one of those harbouring thoughts about running a pub but continually dissuaded by the negative publicity surrounding pubcos?

Well it seems that a viable alternative exists; the micropub (link below).

http://www.independent.co.uk/life-style/food-and-drink/features/a-local-pub-for-local-people-micropubs-are-catching-on-2217205.html

Much is made by pubcos of their desire to attract to attract budding entrepreneurs to the trade. Many would counter that such pronouncements amount to little more than empty rhetoric from an industry desperately committed to ensuring the shackles of the tied model remain firmly in place.

Some it seems have become weary of waiting for change and have taken matters into their own hands, creating a viable and seemingly sustainable alternative.

The micropub is a simple yet highly effective concept, one that appears to offer a viable alternative to the traditional route most people feel obliged to take. Find a well located retail premises, anything from a newsagents to a butcher shop, and convert it into a pub!

It seems that one major benefit of the Licensing Act was the removal of many of the barriers that made such a process both legally daunting and prohibitively expensive prior to the enactment of the legislation in 2005.

Given the much publicised problems currently besetting the trade, a scaled down low cost model such as this appears to offer some highly tangible benefits.

  • Low      cost entry – given the unprecedented escalation of pub closures, a plethora      of bar equipment is available from sites such as eBay; all at highly      competitive prices.
  • Flexibility      of location – the number of vacant retail units on the high street ensures      a wide variety of potential sites are available. Landlords desperate to      get their vacant premises trading again will almost certainly be amenable      to highly competitive deals.
  • Product      Range – the ability to offer an impressive range of cask ales from      microbrewers at very affordable prices.
  • Small,      often cramped premises.

What’s so appealing about small cramped premises? Given the escalating costs of running a traditional pub; small retail units undoubtedly offer an opportunity to streamline outgoings. (Many tenants currently exiting the trade cite excessive running costs as the primary factor influencing their decision to leave).

I think it’s fair to say that industry has never needed a scaled down low cost model more than it does right now.

There’s an additional benefit. It seems the cramped surroundings encourage people to adopt some rather strange behavioural traits.

Starved of both technological and visual stimulation customers feel obliged to engage in the good old art of conversation; often with people they’ve never seen before!

In the good old days such antics wouldn’t have raised an eyebrow. The fact that it now does illustrates the extent to which many pubs that have willingly embraced the noise invasion of satellite TV, AWPs and the dreaded jukebox to the detriment of basic human interaction.

So, will a USP that focuses on getting back to ‘core’ values be sufficient to lure punters back?   Quite possibly.

Just as importantly; will it be enough to convince the budding entrepreneurs out there that running a pub might not be such a bad idea after all?

Robert Sayles

BII Chairman Resigns, Barrel-Dregs (252)

BII Chairman Resigns

Potboy  (Mayfair) was having a swift jug in his favourite watering hole near Park Lane and the Landlord grabbed him and said had he heard the latest news, the Chairman of the BII had resigned, the obvious comments  went round the immediate circle of “ A rat leaving a sinking Ship.”

Rather did he jump or was he pushed?

Whatever, there has to be a “Fall Guy” otherwise too many others with cushy numbers will get their heads chopped, the BII have too many and the redundancy bill is way beyond its current assets.

The discussion took a more focussed view since the gathered drinkers were all involved in the business of selling beer one way or another.

When Grant took over as Chairman, he had previously been Treasurer. The finances were a comfortable £3.5 million, they spent £2 million buying the offices, at the height of the boom, leaving reserves of £1.5 million.

They lost around £1 million during the course 2008/9 and made a small profit in 2010, leaving reserves of around £.5 million, in 2011 they lost a further £400K and the Chairman said that they would need an overdraft by June, a view apparently not shared by the new CEO.

Another division of the BII has seen its market share drop by £500K, it does not look impressive.

Potboys’ source in the City said there was some talk of basic qualifications being made available at cost or below to a major supermarket, they as any supermarket supplier knows dictate the price, if this is correct a dangerous strategy.

The Financial Director of a number of years, was removed post haste a couple of years ago for supposedly trying to better his life style.

The Membership Director was made redundant after quite a few years service, within the last two years.

The conclusion was that the whole situation is in a very tricky mess.

However the one light on the horizon is that Bernard Brindley is taking over the Chair, a very nice guy, but whether he has the experience and expertise to put the BII back on the road to financial recovery and universal acceptance is a major question mark.

Potboy would have liked Phil Dixon to have thrown his hat into the ring for the position of Chair, he has good experience of a successful BII, as Membership Director and is more of a street fighter than Bernard.

Interesting times, watch this space.

Potboy (Mayfair)

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.

 

 

 

 

A meeting with the Minister responsible for Pubs etc.

This is an extract from Facebook, following a meeting with the learned Mr Lamb MP

Right – myself & friend Rob visited Mr Lamb this evening and of course he understands our plight!

Seriously though, both myself & Rob (constituent, concerned CAMRA member & pub frequenter) pushed the point that the pubcos really aren’t behaving well – on the issue of self regulation he blamed it all on Ed Davey (!) but that he wanted to see how the adjudication went – basically wants some proof.

He did say that he would be very happy to hear from individual lessees about how they have been treated – off you go!

He did seem genuinely concerned, and shocked, but how far he will take that I don’t know.

He also (now) understands how alone we all stand against bullying tactics of the likes of the pubcos, Brulines, PPL, HMRC, councils, etc etc & that there is no trade body fit to help us.

He dictated a letter to dear old George Osborne re the beer tax escalator whilst we were there.

Who knows if it will help, but I gave him some reading material too, just in case he forgot what I said!

I will of course follow it up with an email & generally keep harassing him!

Dawn Hopkins

BII Annual Lunch, report from Potboy (Mayfair) Barrel-Dregs (251)

The BII Annual Lunch

Potboy (Mayfair) managed to scrounge a ticket to the BII Annual Lunch at the Grosvenor House on the 8th May.

The whole event had a surreal feel to it due to the presence of not one, but two elephants in the room.

 

Peter Thomas, making his first address to the Annual Lunch as the new BII Head Honcho, looked like a frightened rabbit caught in the headlights – as well he might. He began by informing the ‘great and the good’ of the industry that “despite the recent headlines, I’m not going to give a ‘state of the nation’ report about BII. That’s not what today is about. Today’s about celebrating the BII Licensee of the Year Award.” So, the first elephant in the room – BII’s massive £400K loss for 2011 – was simply dismissed as not up for discussion. Potboy was stunned!

 

Potboy has it on good authority that a long-standing pubco member of the BII Council had contacted Chairman Martin Grant and demanded his resignation – for inadvertently telling the truth to the PMA that BII’s finances made “grim reading” and “we’ll need an overdraft by June”. Meanwhile Peter Thomas had been quoted as saying “financial controls are running, there’s plenty of cash.” How can Captain Thomas steady the ship if Admiral Grant thinks it’s sinking?

 

Potboy became even more confused when Captain Thomas went on to say that BII must up its game and develop a much more effective communication strategy. If they did communicate more effectively, what would they say? Certainly nothing about the one story that was on everyone else’s lips.

 

But “this is YOUR BII” thundered Captain Thomas. BII is the acknowledged “professional body for the industry”, pause, bring up BII logo on to big screen, “BII, raising standards in licensed retail” it read. And here we come to the second elephant in the room: only two days earlier BII allowed itself to be bullied into disallowing Brew Dog’s winning entry for the Bar Operator of the Year Award up in Scotland. Potboy understands that Big Booze wasn’t happy with the independent judging panel’s decision. So up trooped the new winners to get their plaque, and then they noticed it had Brew Dog’s name engraved on it! Red faces all round then! Potboy has to wonder how BII is going to raise standards if they can’t even carry out a good old-fashioned fix without getting caught!

 

Morally bankrupt and financially bankrupt the good ship BII, like the Titanic, has hit a big obstacle. The band is playing in order to keep up appearances. Meanwhile the chaps on the bridge will no doubt find a way of populating the lifeboats, leaving the good folk in steerage with no choice but to jump off the ship and onto the iceberg. 

Potboy (Mayfair)

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.

Alliance Online Catering Equipment – suppliers of Pub and Bar Equipment to the Licensed Industry

 

If Pubs could talk, from the pen of Robert Sayles, Barrel-dregs (250)

If PUBS could talk

Wandering home, I became lost in thought following a pleasant evening spent at a friend’s house…….Suddenly, a voice, “Bob”.

Looking around there wasn’t a soul in sight; the street appeared completely deserted, save for a cat perched on a nearby wall.  

Again the voice; this time from behind.

 “Bob, I’m here.”

Turning, I found myself standing in front of a seemingly deserted large pub. Suddenly the weathered stone walls merged into a face. “It’s me Bob; I need to talk to you.”

“But you’re a pub, you can’t talk.”

“Oh we can, but only to those that wish to listen. I’m sorry if I startled you but I’m desperate to talk to someone; I’ve got so much to say.”

“Well, I’m always willing to listen. What’s on your mind?”

“Well I don’t really know where to start. So much has happened in this pub over the years. There was a time when I was the hub of the community united in their love of the great British pub.

People have enjoyed some pretty special moments here.  I’ve watched them fall in and out of love, laugh and occasionally cry, celebrate the highs and commiserate over the lows.

These walls have seen it all I can tell you. People came here in search of camaraderie and friendship and invariably found it. Life’s little problems could, for a few precious hours at least, be left at the door. But that’s all changed. Nobody comes to visit me now Bob. What happened? Where did they all go? Why don’t they love me anymore?”

“Well look at the state of you for a start” I replied, pointing to the grubby walls and peeling paintwork. “You’re old and dilapidated. You need to tidy yourself up.” 

“I know. I’m ashamed of myself, I really am. But it’s not my fault; nobody has invested in me for years.

A brand new coffee shop has opened up just down the road. Gleaming fixtures and fittings; glistening toilets. I can’t compete with that.

Why didn’t my pubco spend any money on me Bob?”

“Unfortunately the big property companies in particular were guilty of tunnel vision” I replied. “Focused   purely on growing their property portfolios, they didn’t have the foresight to realise the importance of investing in their acquisitions to ensure long term viability.”

Now they’ve been caught with their trousers well and truly down. Like many, they were taken in by soaring book values, an inevitable consequence of an over inflated market, one fuelled primarily by their own overwhelming desire to expand.

They also got complacent; assumed people’s love of beer would never wane, that they’d continue to frequent pubs and not to be too fussed by the quality of the interior. That’s why so many pubs today look what they are; the product of a bygone era.”

“You’ve got that right. I’d invite you in to have a look around Bob; but quite frankly I’m ashamed. Do you know I’ve still got the same toilets I had in 1958? The pubco never spent a penny on me. Why have they always been so reluctant to show me love?”

“Too busy cosying up to shareholders” I replied “or ensuring Director pay awards and bonuses keep heading north whilst tied tenants get poorer by the day. They know the game is up; they’re just trying to keep the scam going long enough to cash in their chips and bail out.”

“It’s funny you should say that because I recall a conversation between an RM and a BDM in my back bar. One of my previous tenants was about to go under and they were discussing what to do about it.

The RM talked about ‘maintaining the illusion of value’. Any idea what he was talking about?”

“Well imagine the scenario whereby a succession of tenants take on the same pub yet none of them manage to make a go of it? What would you conclude?”

“The rent is too high?”

“Probably. The obvious thing to do in such a case is to lower rental premiums, isn’t it? Of course that’s the last thing property companies want to do, they’re in the process of offloading many of their outlets.”

“But surely giving the tenant a fair deal makes the pub viable and that’s good for everybody isn’t it?”

“Not necessarily” I replied. “You see the book value is inevitably tied to the rental premium an outlet can achieve; it’s one of the first thing investors look for. If a pubco reduces its rental premium it’s a tacit admission that their estate is overvalued.

The sad truth is that whilst book values have indeed fallen, rents haven’t; resulting in penury, hardship and ultimately heartbreak for increasing numbers of tenants. Also, let’s not forget that rateable value is linked to inflated FMT figures. Inevitably this ensures many of the bills sent out by local councils are way out of sync with the realities of trading in the ‘New World’.  

Companies such as SKY also benefit as their price structure is linked to inflated RVs. Is it any wonder the industry is in such a mess? The tenant is getting screwed every which way!”

“You’re right there Bob. Do you know I’ve had four tenants in the last two years? None of them have been able to make any money. The BDM just keeps insisting they’re not REOs.”

“He’s burying his head in the sand” I replied.” It’s always easy to make the tenant the scapegoat for their own failings. They’re preoccupied with servicing debt; it’s as simple as that. With such an obvious agenda, how can a tenant hope to get a fair deal?” 

“I suspect you’re probably right. In my case, all they’re looking for is a caretaker to keep me trading until they offload me. They keep saying I’m no longer viable.”

“Take my word for it, you’re still viable. It’s the so called ‘business model’ that’s well past its sell by date.”

“Try telling them that. They’re trying to sell me off as a pub. If there are no takers I’m penciled in to become a supermarket or a block of flats. Failing that I’ll probably become a car park.

 A bloody car park, can you believe that? I’m a pub Bob. That’s what I am, what I love being. Isn’t anybody going to stop this insanity before it’s too late?”

“Probably not” I replied, “but let’s look on the bright side; finding somewhere to park the car won’t be a problem from now on, will it?”

Rober Sayles

 

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.

 

Alliance Online Catering Equipment – suppliers of Pub and Bar Equipment to the Licensed Industry

How low will the BII go to get a YES vote at the AGM, Barrel-Dregs (249)

BII Membership and the BII AGM?????

 

I have been a member of the BII for twenty plus years, worked as a Consultant for them for thirteen years looking after membership in various regions of the country, served on four Regional Councils, gave hundreds if not thousands of hours of unpaid work for them dealing with stressed members and regional activity, wrote a mass of useful information for them, gave them free access to all the information on www.buyingapub.com, and in the early years brought more good long term members in than anyone else.

Guess what, I receive a phone call at 9.10 this morning telling me that my membership expired yesterday, if I don’t renew it, my proxy vote will be rejected.

The BII have sunk to even further depths of desperation in trying to remove the NO vote, how many Yes proxy voters did they call?

Very few I would think, then not everyones membership expires at the same time, normally they give you a months grace and the whole thing is casual and accommodating to suit the member, not with the present crew, no stone unturned to get their wicked way.

Admiral Grant and Captain Thomas of the Good Ship BII (see Barrel-Dregs No. 232) have totally lost their marbles to finally lose all credibility to become a subsiduary of the Pub Co’s whose senior members they aspire to being on the BII board.

The BII should be a neutral independent body to supervise the industry with members interests paramount, buying Pub Co members without any checks of ability makes a farce of the BII being a professional body, down grades members status and does not provide long term members.

The Pub Co’s want the BII to legitimize their activities and circumvent compulsory legislation.

How low and gullible has the BII gone, under a Chairman who should have been kicked into touch as soon as membership declined.

I will not be renewing my membership unless the Chairman goes and the organisation returns to being a truly professional independent, neutral body.

As I have said before, the BII does not need the worst Pub Co’s featured in the BISC Inquiries, the Pub Co’s do need the BII, but on the BII’s terms, if they have the ability to stand up and back their demands, they certainly won’t under Grant or Thomas on the present showing.

Nigel Wakefield as of yesterday ex CBII

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.

 

Alliance Online Catering Equipment – suppliers of Pub and Bar Equipment to the Licensed Industry

MORGAN & CLARKE MAY 2012 NEWSLETTER NO. 6, well worth reading

Pub Rent and Leases sharp practice???

MORGAN & CLARKE  MAY 2012 NEWSLETTER NO. 6

Pigeon House, The Broadway,

Oakridge Lynch, Stroud, Glos. GL6 7NU

Email: info@morganandclarke.co.uk   Phone:  01285 719292

www.morganandclarke.co.uk

(Also at:  London, Cardiff, Matlock, Braunton, Lewes)

 

Technology can be a wondrous and sometimes dangerous thing if not fully understood and controlled.   Whilst it is truly remarkable the extent to which electronic communication, the internet, Apps, iPads, etc. etc. have now taken over and indeed dominate commercial life, there are still a number of stings in the tail for the unwary.

 

When informal is not informal

We had a recent case of a Wellington Pubco lease in Essex having a majority sales high-end food content and a turnover of approximately £550,000.   Expenses related to the gastro pub image were very much higher than a standard pub operation, with wages at 32% which in the circumstance, were completely justified.   The existing rent is £62,500 and the Landlord’s proposal was that the rent should increase up to £71,750.   As a negotiating “concession” a Calderbank offer was served on the Tenant at £68,750 which the Tenant mulled over and then, thinking that he had won a good deal as the initial rent aspiration had been reduced by some £3,000, sent the following email which he considered an “informal acceptance”, to the Expert acting for Wellington:

“Further to your email of the 17th February 2012 and the Calderbank offer of 14th February 2012, I hereby accept your offer and the increase of rent to £68,750.   If you require anything further, please do not hesitate to contact me”.

 

The Tenant had second thoughts and realised that he had perhaps been stitched up in a standard “good cop, bad cop” negotiation and contacted Morgan & Clarke Chartered Surveyors for a free strength of case review, confirming that he had only “informally accepted” the Calderbank offer.   Our view was that he had been stitched up like a kipper and the true rent was lower than the current rent.

 

We were only supplied with detail of the acceptance email about three weeks later and had to inform the Client that there was nothing “informal” about the acceptance email at all.  It quite clearly constituted an unqualified and binding acceptance, notwithstanding that it was by email rather than standard letter and did not carry a written signature.

 

There has been a raft of recent case law supporting the binding nature of email correspondence and certainly, in this case, had there been inserted a qualification “Subject to the signing of a formal Rent Review Memorandum” there would have been a breathing space for reconsidering the position until the Memorandum had actually been supplied and signed.

 

We looked at the case very carefully and concluded that there was a cast iron certainty for the rent not to increase an iota over the existing rent.  How much did this cost the tenant?  If the rent had not increased over that as existing, the “extra” for the newly agreed rent was £6,250 per annum or £31,250 over the five years until the next rent review.  It was an unfortunate and expensive lesson to learn what is and is not “informal correspondence”.

 

Was it an oversight or a deliberate tactic?

The formality of the process of lease renewal is enshrined in the Landlord and Tenant Act 1954 (as subsequently amended by other legislation), specifically the Landlord’s Notice (Section 25) and the Tenant’s Counter Notice (Section 26).

 

The Section 25 Notice specifically states in the 1954 Act:

IMPORTANT NOTE FOR THE LANDLORD:

If you are willing to grant a new Tenancy complete this form and send it to the Tenant.  If you wish to oppose the grant of a new Tenancy use Form 2 in Schedule 2 to the Landlord and Tenant Act 1954 Part 2 (Notices) Regulations 2004 or where the tenant may be entitled to acquire the freehold or an extended lease, Form 7 in that Schedule instead of this form.”

All fairly straightforward in that it is the Landlord who has to instigate the process.  The actual notice period is six months.  Herein lies the repeated “oversight”.

 

Take the example of the Chichester public house, West Street, Chichester.   Standard Punch 10 year lease which expired on 20th December 2011.   Low and behold, Ford & Warren acting for Punch, served the Section 25 Notice by letter dated 9th February 2012 giving six months’ notice that they would grant another tenancy effective from the 16th August 2012.   So what’s the problem?

 

Quite simply, the existing eye-watering level of rent that is being paid in respect of the Chichester, will still hold until the grant of the new lease.   If, as expected, the new lease rent will be considerably less, then Punch have “earned” an extra nine months’ worth of higher rent.   However, and this little item is often overlooked, you can apply for an interim rent to be set from the termination of your existing lease until the grant of the new lease.   Regrettably, more often than not, this is forgotten.

 

We have a new Client in Evesham with an Enterprise Inns lease renewal where the Regional Manager verbally confirmed (surprise, surprise, nothing in writing) that Enterprise Inns would not be serving a Section 25 Notice, it would be up to the Tenant to serve a Section 26 Notice if she wanted to stay.   So much for the Codes of Practice and Section 25 requirements of the Landlord & Tenant Act 1954.

 

Timing is all-important in lease renewal and it is essential that the Pubco / Brewer is reminded to issue the Section 25 Notice in good time and at least six months before the expiration of the existing lease.   If nothing has happened, then the Lessee / Tenant should be pro active and issue a Section 26 Notice!

 

The ‘Cuddly’ Family Brewers?

Terry O’Neill of the Plough, Sheen, sought to buy his freehold from Enterprise Inns.   At the last minute Enterprise sold to Fullers for £50k less than he had agreed.   Morgan & Clarke Director Simon Clarke delved further.

 

The Plough previously had 6x hand-pull beers, usually offering Sharps Doombar, St. Austell Tribute, Fullers London Price and ESB, Sambrook Wandle and Wells Youngs Bombardier.  Within a week of purchase, Fullers came in and asked David Keogh to remove all but Fullers supplied products – leaving just two of the original beers.   Fullers offer a limited guest ale selection, none of which are very popular with the customers, but David Keogh is trying to accommodate the changes and has strong customer loyalty, although he is losing custom to pubs with a greater selection of beers.   In the last two weeks, Fullers have even failed to deliver the guest beers ordered and for the first time, the Plough has seen 4 of its 6 hand pumps lying redundant.

 

David Keogh still sells Fullers London Pride, but believe it or not, he tells Simon, it is more expensive from Fullers direct than it was through Enterprise Inns!

 

The lease provides that the lessee must sell certain ‘types’ of beers listed.   Beer types not listed can be sold but the lessee must show either the sale in draught form is customary, or that there is sufficient customer demand (there is no requirement to define the reason for the demand).   David Keogh has applied to Fullers to sell Cotswold Wheat Beer.   Wheat beer is not a specified list type, it is supplied in kegs (so custom is to sell it in draught).   A petition demonstrating demand, signed by around 100 customers, collected in only three days, has been supplied to Fullers.

 

In response the answer came back from Fullers seeking to deny the sale of this beer initially on the grounds that wheat beer is a type of lager (lager is brewed entirely differently).   Fullers supply Hoegaarden Wheat Beer which is listed in their price list under lager.   This in itself is an embarrassing admission by a major UK brewer that they do not know the difference between lager and wheat beer brewing.   Also, they claim that it is not customary to sell in draught and that the petition does not demonstrate sufficient customer demand – why would a lessee want to supply a product if he does not have a demand for it?   More recently Fullers are claiming that if it is not a lager, it must be an ale, both being listed types in the lease.   In other leases and indeed brewing competitions, wheat beer is defined as a specific individual type.   Fullers are simply seeking to deny the lessee any other beers other than those they sell at an extortionate tied price, by claiming that whatever the beer type, it falls within their listed definitions and therefore there is no such thing as an ‘unspecified beer’.

 

Fullers tenants should ask Fullers to give an example of a type of beer that they consider to be an unspecified beer – fruit beer for example – would that be unspecified?

 

If Fullers’ plan is to absorb the Plough into their managed estate, they can wait around nine years to expiry at which time they can deny renewal on the grounds that they want to occupy the premises themselves.   This is valid grounds for denying the grant of a new lease under the Landlord & Tenant Act 1954, Section 30(1)(g).   However, (now perish the thought!), it could be alleged that Fullers’ actions might put the lessee out of business by limiting his beer selection and increasing the price so much that his customers are driven away, forcing business failure and allowing them early occupation.

 

This is not a one-off.   The Cabbage Patch, Twickenham, Frog & Wicket, Eversley Cross, Hampshire, Coach & Horses, Soho and Lamb & Flag, Covent Garden (in addition to the recently acquired 15x pub portfolio), will be suffering similar difficulties.

 

Two other ‘cuddly’ family brewers that appear to be mimicking Fullers, are Marston’s and Charles Wells.   Food for thought we think!

 

Two Quotes of the Month

w.c. Fields:                  Once during Prohibition, I was forced to live for days on nothing but food and water”.

Phyllis Diller:             “Health – what my friends are always drinking to before they fall down”.

 

Best Wishes

The Team at M & C

Email:  info@morganandclarke.co.uk

Phone: 01285 719292

Negativity is good, negativity is right, Barrel-Dregs (248)

Pub Negativity

Negativity is good, negativity is right

I read Stephen Crawley’s article ‘Ditch the negativity, positivity gets results’ with some interest. What came across most forcibly was the notion that negativity is somehow counter-productive; a mindset we should refrain from resorting to whenever possible.      

Negativity can on occasion be self-defeating; there is little doubt about that. Customers frequenting pubs for example, often do so to escape the tedious day to day problems that beset us all. They have little desire to be burdened by tales of woe from publicans, most of us would acknowledge that fact.

And yes, positivity can be a good thing. However, there are undoubtedly times when it has its drawbacks. I suspect that with the benefit of hindsight, Giles Thorley wishes he’d been rather more circumspect prior to his acquisition of Spirit.

However, in a more global context, I would suggest negativity certainly does have a very important role to play. After all, it draws people’s attention to certain issue; suggests things are amiss, not quite as they should be. Take the case of Russell Ham for example. 

Russell’s a Punch tenant who typically works a ninety hour week. Last year he made a pitiful £3,000. The net result is that he’s become all too accustomed to living on the edge; nostrils barely protruding above the waterline.

I suspect he doesn’t have too many ‘glass-half-full messages’ for us. He’s too busy treading water.

Yet watching the video interview with John Harris, I was struck by Russell’s positivity. To his customers at least, he appeared the genial host, a consummate professional; one any pubco should be only too proud to have as a partner.

Only when the last of his clientele had drifted away did the head scratching and soul searching begin.

Russell’s plight is typical of many. Stories abound in the local press of tenants being evicted or handing back keys; the overwhelming majority cite unworkable agreements which offer little or no prospect of a decent return.

Of course, in the good years, tenants leaving the trade barely registered a blip on the pubco radar. Long queues of prospective replacements were always waiting in line, eager to jump on the gravy train.

Thanks to the increasing number of stories in the media highlighting the plight of publicans, those days are long gone.

That is why I would suggest that rather than ditch negativity we need to embrace it. It is our most potent weapon in the ‘war on reform’. The spectre of pessimism is beginning to haunt pubcos; their increasingly desperate attempts to create the illusion of change bear testimony to that fact.

New agreements for a new era they say; ‘flexibility’ and ‘choice’ for all. If only it were so.

The high rate of pub closures and widespread tales of penury and hardship tell a different story. As the tsunami of negativity gains momentum, pubco assertions of ‘support’ and ‘partnership’ appear increasingly shallow. The reality is that little has changed at the ‘last chance saloon’.

To some extent at least, the future of the tied model does still lie in the hands of pubcos.

After all, they could take on board Stephen Crawley’s message and embrace positivity. Acknowledge the market has changed beyond recognition, offer their ‘partners’ agreements which allow them to make a decent living.

Sadly, that might just be too much to ask for. Thus far at least, they have shown little inclination to change their modus operandi.

In the case of Russell Ham, what is the alternative? Kick him out onto the street as they have done with so many others?

Will this not merely serve to generate more negative headlines about the ‘big bad pubcos’? And let’s be honest about it; what are the prospects of Punch finding anyone that knows the pub and customers that frequent it better than Russell?

Of course it is quite possible they care not one jot, having already decided to merely let him fall by the wayside whilst they quietly pocket the money acquired through the retention of his deposit and f and f money.

Unfortunately, this has become a depressingly familiar scenario. ‘Low cost entry’ they say; rather less is made of the financial implications of ‘failure’.

Some time ago, a senior figure in the drinks industry referred to big pubcos as ‘unwieldy beasts’.

Now of course there are those who would have us believe that these beasts are capable of change. It is not a view I concur with. Such sentiments are misguided, the product of naivety in the extreme; expressed by those who have little inkling as to what we are dealing with.

The fact of the matter is that the beast remains a fearsome predator; ‘carcasses’ strewn across the countryside bear testimony to its veracious appetite. Yet, thanks to the growing momentum of negativity, it has become increasingly fearful; rightly so.

‘Prey’ is becoming ever more elusive. Slowly but surely, the beast is bringing about its own demise; sowing the seeds of its own destruction.

For us to ultimately prevail in this long drawn out conflict, we must starve it into submission, deprive it of its staple diet; gullible new entrants to the trade.

That is why it’s imperative we continue to embrace, savour and propagate the sweet sound of negativity. Ultimately, it is key to driving fundamental reform of the tied pub sector.

So come, join with me in singing along to the melodious harmony of glorious pessimism.

‘Negativity is good, negativity is right.  Oh yeah.  Negativity is good, negativity is right.’

Doesn’t that sound and feel a whole lot better?

Robert Sayles

 

The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.

 

 

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